March 21, 2008
The Moral Economy of Web 2.0 (Part Three)

See the first two parts of this series here and here. I have been running this over on my blog. This series is co-authored between myself and Dr. Joshua Green, C3's Research Manager.

The Value of Engagement and Participation

"Corporations will allow the public to participate in the construction and representation of their creations or they will, eventually, compromise the commercial value of their properties. The new consumer will help to create value or they will refuse it... Corporations have a right to keep copyright but they have an interest in releasing it." --Grant McCracken (1997)

At the most basic level, the distribution and publicity mechanisms of networked computing renders visible the often "invisible" labor fans perform in supporting their favorite properties.

As Jenkins explains:

If old consumers were assumed to be passive, then new consumers are active. If old consumers were predictable and stayed where you told them, then new consumers are migratory, showing a declining loyalty to networks or media. If old consumers were isolated individuals, then new consumers are more socially connected. If the work of media consumers was once silent and invisible, then new consumers are now noisy and public (Jenkins 2006a, pp. 18-19).

Fans act as "grassroots intermediaries," shaping the circulation of media content at a moment when the industry is concerned about market fragmentation. The result has been a revaluing of fan loyalty and participation based on "affective economics" (Jenkins 2006a). Older audience measurements were based on the concept of "impressions," counting the number of eyeballs watching a particular program at a particular time. Scaling up via samples said to be statistically significant, this counting determined the potential number of people exposed to advertisements. An impressions model assesses the frequency of exposure and contexts where ads are placed. Over time, "impressions" have been supplemented by demographic measurements, seeking more precise information about the kinds of viewers watching particular programs, given that different "demos" hold different value for different brands.

These same companies now search for signs of audience activity and "engagement." For example, research done by Initiative Media found that less than ten percent of the viewers of most network television shows regard the program to be a favorite, while some shows -- especially cult programs -- are regarded as top choices by as many as 50 percent of their viewers (as described in Jenkins 2006a). The research, further developed through a close study of viewers of American Idol, suggests that viewers watching a favorite series were twice as likely as more casual viewers to pay attention to advertisements, less likely to switch channels during commercial breaks, and had significantly higher brand recall. Almost half of loyal American Idol viewers search the web for more information about the show and thus had more extensive exposure to affiliated brand messages. The researchers advised their industry clients that a show with a high level of engagement may be a better investment than a program with higher overall ratings but only superficial audience interest.

Under this model, the value of consumer loyalty is still being read primarily in relation to traditional consumption roles: watching television programs and purchasing advertised products. Other companies push further, developing feedback mechanisms which tap consumer's individual and collective insights to refine the production process. In his book Democratizing Innovation, Eric Von Hippel (2005) describes how manufacturers have enabled low cost innovation by closely engaging with their "lead users." The earliest adopters frequently adapt products to their particular needs and interests. By incorporating these "lead users" into the design process, Von Hippel argues, companies can discover new and unanticipated uses for their products or locate untapped markets. Von Hippel talks about the emergence of an "innovation commons" as companies monitor social networks for user insights. In some cases, companies actively solicit such feedback throughout their design and development process; Lego engaged its most hardcore fans in a feedback loop when improving its Mindstorms product (Jenkins 2006b). "Crowdsourcing" constitutes a more formalized version of the innovation commons: companies such as Threadless, iStockphoto, and InnoCentive solicit design ideas from their consumers, using their online community to weight their attractiveness, and sharing revenue with the amateur creators whose products the companies produce and distribute (Brabham 2008).

While Von Hippel writes about manufacturing processes, similar practices occur within the creative industries. Historically, fan cultures have most often involved what the industry regarded as "fringe viewers" who fell outside of the desired demographic -- for example, the most active reworking of program content came from female fans of action-adventure series or adult fans of children's culture (Ford et al. 2006).

Increasingly, more sophisticated companies pay attention to such "surplus" consumers because they represent ways of extending their potential market. Modest shifts in the program content, for example, spending more time on a beloved secondary character or adding more serial elements, can broaden interest while spin-off products sometimes directly target these consumers. Similarly, some video game companies (Jenkins 2006a) allow player access to development tools , resulting in a "mod" culture where amateur designers produce and circulate "skins" for characters, new levels of game play, or animated films (machinima). Mods provide a low cost, minimal risk way of determining what refinements might generate consumer interests. Minimally, these practices extend the shelf life of the original products (since the amateur content can only be played with the original software) and in some cases, these companies have hired these amateur designers or contracted to distribute their mods as part of official expansion packs (Camper 2005).

As John Banks (2002; 2005) discusses, Brisbane-based developer Auran distributes player-modded elements of their train simulator Trainz. The company develops a "third party developers" relationship with these amateur co-creators, enabling Auran to better align their product with the community's desires. Auran has effectively expanded its workforce by releasing design guidelines and production tools and providing enthusiasts access to Auran's professional design team. These amateur teams sometimes generate labor intensive features the company couldn't otherwise afford to produce. This model has been so successful for Auran that they also use the fan network to manage the distribution and promotion of their product at gamer events.

Harnessing productive fans is not always so straightforward. Raph Koster, the man in charge of the development of the multiplayer game, Star Wars Galaxies, incorporated the fans of George Lucas's science fiction saga as clients in the design process, making early specs for the game available via the web (Squire et al. 2000; Jenkins 2006a). Koster's early courtship of these fans resulted in an immediate fan base when the game launched but power struggles within the company (2006c) resulted in significant deviations from the recommended policies. Retooling the game in hopes of expanding its market, the company alienated the original players without generating new interest. Van Hippel (2005) acknowledges that the earliest adopters are not necessarily representative of the larger market and thus their insights need to be weighed carefully in predicting market interest. Moreover, incorporating users into the design process requires trust; companies risk alienation and backlash when they pull back from what consumers perceive as commitments.

Tapping a creative user-base requires balancing market and non-market motivations. Discussing the Auran example, Humphreys et al. note that hobbyists often operate along different timetables than publishers. Motivated by passion, interest, and social rewards, amateur developers often fall behind timetables and they demand more attention than companies can afford. Humphreys et al argue this relationship reveals not the exploitative nature of mobilizing users as co-creators, but the complexity of the power relationships shaping participatory culture.

In other cases, fans play curatorial roles. For example, American fans of Japanese anime grab content which has not yet been imported, circulating copies through an underground circuit with their own amateur subtitles. While some companies might shut down such "piracy," the Japanese companies watched this black market closely but allowed it to continue. These "fansubbing" practices are credited with identifying properties with American appeal and educating consumers about unfamiliar genres (Jenkins 2006a; Leonard, 2005). Commercial distributors often draw heavily on titles with fan bases established through underground circulation. In many cases, fans have stopped circulating their amateur versions to ensure a viable market (Hatcher 2005). Sam Ford (et al. 2007) argues something similar has occurred among fans of American wrestling, where the underground circulation of wrestling tapes indicated a market for the World Wrestling Entertainment's archives.

Accordingly, Wired Magazine Editor-in-Chief Chris Anderson's (2006) idea of the "Long Tail" has become a major preoccupation within the creative industries. Drawing on examples such as Amazon, Netflix, and iTunes, Anderson argues that rather than focusing primarily on a small number of expensive properties with generalized viewership, media producers should produce and distribute lower cost materials which may appeal to a range of niche audiences. While most physical stores can only stock those titles which quickly move units, online distribution can sustain a vast backlist. Anderson argues that the "long tail" of storehouse titles will collectively generate greater revenue than the most popular titles. Anderson's model suggests profit from niche markets depends on lowering promotional expenses (by relying more heavily on "buzz" from impassioned and empowered consumers) and distribution costs (through online exchanges). MySpace represents a good example of how this process works: the social network site is a favorite among bands -- big and small -- who want to identify and get information out to their most hardcore fans; here fans form "friend" groups, whose music they like, and then pass cuts along to their friends. Bands, in turn, use their sites to get word out about concerts or allow fans to sample new releases. Similar ideas have been embraced by independent media producers of all kinds. For example, the producers of the independent film, Four Eyed Monsters, have used a range of different Web 2.0 platforms to generate public awareness of their production (Jenkins 2007b). They have, for example, encouraged potential viewers to register their interest in seeing the film. As they identify sufficient numbers of interested viewers in any given locale, they solicit exhibitors, demonstrating a ready market in their area. Some television producers have proposed that fans of cult media producers might sign up in advance, funding the production and distribution of new properties (Jenkins 2006a). A smaller number of shareholders or subscribers might sustain programs which otherwise didn't meet the Nielsen ratings bar required for broadcast television.

If media companies were monitoring fan conversations, they still didn't necessarily understand what they were hearing. In mid-2006, New Line Cinema responded to online anticipation for B-grade horror-thriller Snakes on a Plane. Based on fan feedback, the film went back into production six months after principal photography had concluded to re-shoot scenes to up the films rating to an R (from PG-13) and add dialogue that emerged from fan discussions. Most famously, star Samuel L. Jackson delivered the line, "I've had it with these motherfucking snakes on this motherfucking plane," which originated in a popular Internet parody. Taking a hands-off approach to fan use of Snakes' intellectual property (IP), the studio showcased mash-up trailers, artwork, and t-shirts through their official website and relied heavily on the buzz rather than critics previews or expensive marketing campaigns to "open" the movie. This online buzz generated its own interest, both online and off, setting up high box office expectations.

When it failed to deliver a blockbuster opening, Snakes was quickly declared a bomb. This measurement of achievement, however, seems a narrow assessment of its success. While domestic box office didn't match inflated expectations, the energy around the property created by grassroots intermediaries produced pre- and post-opening revenue streams in the form of marketing, merchandising, and ad-sales opportunities a B-grade film like Snakes might not be expected to generate, and, as Jenkins (2006d) notes, a significant measure of the film's success will come further down the tail as Snakes succeeds or fails to generate more revenues as it is released on DVD or shown by campus film societies. The media confused the internet fan following for a focus group, expecting it to scale out across the general population, rather than trying to understand the committed niche audience it attracted. Accounting for its success as a cultural phenomenon requires a more nuanced mode of measurement than box office revenue.

In each of these examples, companies are re-appraising the value of fan engagement and participation -- in some cases, openly collaborating with fans and in others, allowing fans some free space to repurpose their content towards their own ends. Yet, each also suggests potential conflicts since fan and corporate interests are never perfectly aligned.